Angus v Moore

[2025] NSWSC 726

Supreme Court

New South Wales

Medium Neutral Citation:

Angus v Moore [2025] NSWSC 726

Hearing dates:

23 and 24 June 2025

Date of orders:

24 June 2025

Decision date:

24 June 2025

Jurisdiction:

Equity

Before:

Hmelnitsky J

Decision:

(1) Dismiss the statement of claim.

(2) Dismiss the cross-claim.

(3) Plaintiffs are ordered to pay the defendant’s costs of the proceedings on the ordinary basis up to and including 23 April 2024 and thereafter on the indemnity basis.

Catchwords:

EQUITY — Fiduciary duties — Fiduciary relationships — Where plaintiffs and defendant were joint and several co-attorneys for principal — Whether defendant breached her fiduciary duty in selling principal’s shares and borrowing the proceeds at interest for specified purpose — Whether principal consented to the sale of the shares and the terms of the loan — Where plaintiffs and defendant actively worked together to decide which shares were to be sold and the terms on which the funds would be lent

COSTS — Party/Party — Exceptions to general rule that costs follow the event — Offers of compromise/Calderbank offers — Whether indemnity costs should be awarded

COSTS — Party/Party — Bases of quantification — Trustee basis — Whether exception in r 42.25 of the Uniform Civil Procedure Rules 2005 (NSW) applies

Legislation Cited:

Uniform Civil Procedure Rules 2005 (NSW) rr 20.26 and 42.25

Cases Cited:

Atanaskovic Hartnell v Birketu Pty Ltd (2021) 105 NSWLR 542; [2021] NSWCA 201

Calderbank v Calderbank [1976] Fam 93

Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22

Katsoulas v Kritikakis; Katsoulas v Apostolatos [2024] NSWSC 67

Maguire v Makaronis [1997] 188 CLR 449; [1997] HCA 23

O’Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262; [1998] NSWSC 596

Taheri v Vitek (2014) 87 NSWLR 403; [2014] NSWCA 209

Warman International Ltd v Dwyer (1995) 182 CLR 544; [1995] HCA 18

Texts Cited:

Nil

Category:

Principal judgment

Parties:

Rita Angus (First Plaintiff)
John Aquilina (Second Plaintiff)
Rosemarie Moore (Defendant)

Representation:

Counsel:
L Ellison (Plaintiffs)
S Chapple (Defendant)

Solicitors:
Hammond Nguyen Turnbull (Plaintiffs)
Keypoint Law (Defendant)

File Number(s):

2023/277435

Publication restriction:

Nil

JUDGMENT (EX TEMPORE, REVISED)

1. These proceedings concern the estate of the late Frank Aquilina, who died on 6 February 2022 at the age of 94. He was survived by his three adult children, John Aquilina, Rita Angus and Rosemarie Moore. I will use the same naming convention as used by the parties during the hearing. Without intending any disrespect to anyone, I will refer to the deceased and his three children by their given names.

2. The dispute concerns some dealings that were undertaken by the parties in 2019 and 2020 at a time when Frank was in declining health and in full-time residential care. In 2008 Frank had executed a power of attorney in favour of his wife Vicky and, in default of Vicky, his three children as joint and several attorneys. Vicky died in 2012, so at the time of the relevant transactions each of John, Rita and Rosemarie held a power of attorney to act on Frank's behalf.

3. Between 2017 and 2019 Rosemarie's marriage to her husband Malcolm, to whom she had been married for about 30 years, was ending in quite acrimonious circumstances. By early to mid-2018 it was becoming clear she needed funds to be able to purchase her husband's share of what had been their matrimonial home and, in the circumstances to which I will refer in more detail in due course, her financial needs came to be met in the following way.

Relevant transactions

4. In August 2019 Rosemarie used her access to Frank's CommSec trading account to sell shares in two listed companies, Argo and Origin Energy. She sold 100,902 Argo shares and 19,481 Origin Energy shares. The gross proceeds of the sale of the Argo shares were $834,464.06 and the gross proceeds of the sale of the Origin shares were $138,899.53. The total proceeds of sale, less commission, were deposited into a bank account where they were held on Frank's behalf for several months. In February 2020, after Rosemarie had reached a final settlement with her husband, she withdrew the sum of $813,836 which she used to fund the property settlement.

5. Rosemarie repaid that amount, plus interest calculated at 2.99% per annum for the whole of the period during which the principal sum was outstanding in two ways. So far as interest was concerned, she made weekly cash payments between about May 2020 and May 2022 when probate was granted. So far as the principal was concerned and also so far as concerned the balance of her obligation to pay interest, she repaid these amounts by set-off against what she was owed on the distribution of the estate.

6. It follows that the whole of the borrowed funds have been repaid with interest. I have described the sum of $813,836 as "borrowed funds" advisedly because that is how they were described by all of the parties in these proceedings. It was not in dispute that the advance that was made for Rosemarie's benefit in February 2020 was an advance of loan funds nor was it in dispute that she was under an obligation to pay interest in respect of that borrowing. It was also not in dispute that she was permitted to pay her outstanding obligations under the loan arrangement by set-off against what she was owed from the estate.

7. However, Rita and John say that the dealings that I have just described were undertaken by Rosemarie in breach of her fiduciary duty as an attorney and that the sale of the shares that occurred in August 2019 caused a loss to the estate that has not been adequately compensated by the repayment of the borrowed funds plus interest.

Losses claimed

8. The plaintiffs, Rita and John, now sue in their capacity as executors of Frank's estate for Rosemarie as defendant to account to the estate for what they say the estate has suffered by way of loss. The specific losses which they say Frank and his estate have suffered between August 2019 and today are as follows:

1. The loss of dividends on the Argo and Origin shares between August 2019 and today. The total amount of "missed" dividends as at 17 June 2025 was approximately $41,000 in respect of the Origin shares and $195,749.88 in respect of the Argo shares.

2. The loss of increase in the capital value of the Argo and Origin shares between August 2019 and today. That increase in value was calculated by the plaintiffs to be some $78,703.56 in the case of the Argo shares and $80,674.29 in relation to the Origin shares.

3. The sum of $52,818.97, which was the amount of tax payable on the net capital gain, which Frank realised on disposal of the Argo and Origin shares in the 2020 financial year. Although there was no evidence about it, it was not in dispute that that amount was included in his assessable income for that year and tax was paid on it.

4. The sum of a little over $1,100 in brokerage on the sale of the Argo and Origin shares.

9. All told, the plaintiffs claim that in addition to her obligation to repay borrowed funds with interest the defendant is now obliged to account to the estate for a loss that comes to about $450,000.

Summary of the issues in dispute

10. The proceedings were argued by the parties by reference to four principal issues in dispute.

11. The first was whether or not Frank had capacity to consent to the transactions which I have described and, if he did have capacity, whether he in fact consented to the transactions. Rita and John say that he lacked capacity to consent to the transactions at the relevant time and that, in any event, there is no evidence that he was actually aware of and consented to the detail of the transactions that were ultimately undertaken in his name.

12. The second issue is whether, if Frank did not consent or did not have capacity, the transactions were undertaken by Rosemarie in breach of any fiduciary duty that she owed to Frank. It was not in dispute in the proceedings that Rosemarie was exercising a fiduciary power in transacting on the CommSec account and dealing with the proceeds. The issue is whether or not she breached her duty in that regard in doing what she did.

13. The third issue is an issue raised by the defendant. The defendant says that the plaintiffs are estopped from bringing their claim on the basis that, as Rosemarie contends, both Rita and John were fully aware of the proposed transactions and indeed actively expressed their agreement to the conduct that they now say was in breach of duty. Rosemarie says she sold the shares and borrowed the funds on the express understanding that John and Rita agreed to her proposed conduct. Her evidence was that she had other options available to her at the time that she could have availed herself of.

14. The fourth issue concerns the loss for which the plaintiffs say the defendant should account to the estate. The real question here is as to whether any loss to the estate which flowed from any misuse by Rosemarie of her power is to be calculated in the manner that I have described.

Further background to the dispute

15. Before I come back to those four issues, I will say much more about the facts.

16. As I have mentioned Frank was in full-time residential care at the time that these transactions were undertaken and he remained in care until his death some two and a half years later in February 2022. The evidence as to exactly when he had moved into full-time residential care was a little unclear but it seems it must have been in about February or March 2018.

17. I have already mentioned the power of attorney that Frank had executed. That was done on 10 July 2008. John, Rita and Rosemarie accepted their appointments as attorney on 10, 12 and 20 July 2018 respectively.

18. As already mentioned, the power was in favour of Vicky in the first instance but it also provided that Rita, John and Rosemarie could act jointly and severally, if Vicky became incapable of doing so. The power was in familiar form. Under the heading "Important Information for Principals and Attorneys", the power of attorney contained the following clause:

"An attorney must always act in the best interest of the principal. Unless the attorney is expressly authorised, the attorney cannot gain a benefit of being an attorney."

19. Vicky died in 2012 and so from that time onwards each of the parties was able to exercise their power under that document jointly and severally.

20. Frank made a final will on 13 May 2015. He left the whole of his estate to his three children in equal parts by way of testamentary trust in favour of each. His estate consisted mostly of publicly listed shares, some cash and an accommodation bond. For probate purposes the estate was valued at slightly in excess of $12 million.

21. By 2018 Frank was suffering from numerous medical conditions, many of them age related. He also suffered from poor mental health, including depression and low mood. By about August 2019 the evidence shows that he was frequently distressed by the environment in which he found himself. He also suffered from at least some level of cognitive decline associated with Alzheimer's dementia. An October 2018 report by Dementia Support Australia was in evidence but it was quite generalised and understandably was directed to managing Frank's symptoms and dealing with his particular residential environment.

22. In May 2021 Frank was seen by a geriatric psychiatrist, to whom he seems to have been referred for "an opinion regarding his episodes of aggression". The psychiatrist noted that the main issues that Frank presented with were: (1) hearing impairment and (2) a lack of meaningful engagement with related low mood. The psychiatrist also noted by way of "Background" that Frank's history included "mixed Major Neurocognitive Disorder due to possible Alzheimer's disease and Vascular aetiology". I note that by this stage Frank was about 92 years old. I also note the psychiatrist's report was almost two years after the share transactions about which the plaintiffs complained.

Events leading up to the share sale

23. When Rosemarie’s marriage broke down she found herself in very difficult circumstances. Her children at the time were both teenagers. She found herself having to leave her family home and move into Frank's house during 2018. It was an extremely difficult time for her and her children. Rita and John were both fully aware of Rosemarie's circumstances and there is no doubt that they were very sympathetic to her needs, financial and otherwise. They knew she was undergoing a very difficult separation from her husband and that she needed funds for a good cause, namely, to be able to reach a property settlement with him that would allow her and her children to remain in the matrimonial home.

24. Rosemarie wrote a lengthy email to Rita and John on 2 October 2018, in which she laid out some of her difficulties. She said:

"I also wanted to ask you both….preferably not by email but so it is.

Is there any way you think that dad would possibly help me to buy Malc out of his share of the house so I can stay on? The girls would then certainly be with me for the most part, with visits to Malc."

25. Rosemarie received a response to that email from John two days later on 4 October. His response was lengthy and in very sympathetic terms. It included the following:

“Rita & Rose, here are a couple of scenarios that may be considered:

1) Dad asked about Rose’s proposal and see if he wishes to follow that through.

2) The House is purchased with the help of Dad’s funding. Placed in his portfolio of investments with you paying a rent on the percentage you don’t own. There is no transfer back to you as you don’t have the funds to complete the purchase. On Dad’s passing a new valuation is made on the house, the estate banks any capital gain and Rose pays back 50% of the new higher valuation to the Estate. (There may be stamp duty advantages in leaving it with Rose though. Look into that.)

This would circumvent any need to ‘compensate’ for any possible loss of returns on the funds of Dad’s sold shares. Most likely the estate will get a return from capital growth on the property.

1 or 2 above, with the addition of a boarder(s) of your choosing Rose. We have one at our home at the moment, it works well. Whatever rent you achieve from those boarders is split 55/45% you getting 55% as you are managing the tenancy and pay the 45% into Dad’s account as income.”

26. Rosemarie raised this issue with her father in March 2019. She had taken her father out of care and they were visiting the Concord house when the following discussion occurred. There was a transcript of the discussion in evidence. I refer particularly to the following exchange:

Deceased: "You were going to ask about something?"

Rosemarie: “Because I need help, I, I have never asked you for help before, ok”

Deceased: “What kind of help”

Rosemarie: “Money”

Deceased: “Plenty?”

Rosemarie: “In your, the scheme of things for you, no, its not much for you, but me I have never liked to have debt, I don’t like debt, I feel…. I always pay my debts off, because I don’t like it.”

Deceased: “This one, what’s going to pay”

Rosemarie: “I want to buy my house in Riverview….. from Malcolm,”

Deceased: “Your part”

Rosemarie: “Yeah, no I want to buy his part”

Deceased: “Ahhh ahhhh, ……. you think he will sell”

Rosemarie: “He actually suggested….. he said … it would be good if one of us stay in this house for the girls and I said to him I said to him well you have the better chance because you got the bigger wage, and I cant get a big loan, I went to the banks and they can only give me $200,000 right, on my wage, right. So I would go and get the money from the bank, and then with your help, build it up to buy it. Now we had the house valued last week and we had two valuations. One was last year and the other one last week and they haven’t changed, its 1.8 million”

Deceased: “The house”

Rosemarie: “….. so half of that is 900,000”

Deceased: “So that’s what you want, now”

Rosemarie: “That’s what he would want – half half”

Deceased: “Half”

Rosemarie: “I would have to pay him half”

Deceased: “You think he go out”

Rosemarie: “He would, he have to, if its my house, what….. it sounds terrible, but, I want to get rid of him (in Maltese), I want to kick him out because if he stays, stays, stays, I think he will wait for your to die and (In Maltese)”

Deceased: “Draw more..…”

Rosemarie: (In Maltese) Takes more, but, if I buy the house from now, and I kick him out, he cannot come back, because the court makes it now, everything goes like this.”

Deceased: “With the court then (In Maltese)”

Rosemarie: “We go the lawyer, the lawyer write an agreement, we sign it, the lawyer takes it to court, we have to go sit there, the judges look at it and they say yes that’s fair, stamp and go, and that’s it,”

Deceased: “Look Rose, me….. how long I have to live, I don’t know, so… almost think they might get some money out of that back, maybe”

Rosemarie: “Whats that”

Deceased: “I don’t know, how much it be?”

Rosemarie: “If I can get a loan, it would be probably be about 700,000”

Deceased: "Now work it, work it, work it, then, if there is a chance, gees, I wish I not give it to you so you stay here." (errors in original)

27. I also note the following exchange as set out later in that same transcript:

Deceased: "But then when I die things fall back, usual, ahh”

Rosemarie: “Yes, I put the money, of course, of course, no, I will ask John, he has an idea, the way that you loaned him the money, similar to that, that I pay back. Alright”

Deceased: Carry on, he" (errors in original)

28. The question of whether and if so how some of Frank's shares should be sold in order to lend cash to Rosemarie, as the parties have been discussing, was the subject of fairly careful correspondence between all of the parties at about this time. Rosemarie sent a recording of the discussion to which I have just referred to her siblings. Having listened to a recording of that conversation, John sent an email to Rita and Rosemarie on 25 March 2019 in which he agreed that Frank had assented to the proposal. His email included the following:

"So I propose that the arrangement works as such. (This is just a draft, please put your own T’s & C’s)

The $700,000 required is liquidated from part of Dad’s share portfolio.

A parity interest rate is worked out, maybe track the CBA home loan rate.

That interest rate is applied onto the loaned amount and added to the Principal every month. This amount is not paid down.

If Rose can secure the remaining loan amount to purchase the property then that loan is paid down first. Her proposal to take in a Border will be necessary, to reduce payment pressure. A 200k principal & interest loan over 10 yrs at around 4% is going to cost over $2000 p/m. Having one border paying half of that would be useful.

Using Rose’s current property valuation, on Dad’s passing see what increase there has been. Apply that percentage increase to the 700k PLUS the interest charges.

For example

The current Interest Only 4 yr fixed interest Investment loan is 5.04% costing $2,940 p/m with CBA.

That accumulated monthly amount plus the principal is put back into the Estate on Dad's passing."

29. There were many more discussions and email exchanges about this topic, particularly in mid-August 2019. The parties also met to discuss the question of how Frank's assets might be used to fund Rosemarie's divorce settlement. There was at least one meeting with Frank's accountant, Moien Khan (occasionally referred to as Moin in the evidence) to discuss the matter.

30. On 13 August 2019, John sent an email to Rita and Rosemarie summarising what had been discussed with the accountant. John wrote:

"This is my summary of the meeting yesterday and the action that has been taken. My memory may have skipped stuff, so do fill in the gaps if necessary Rose.

The option of identifying a number of stocks, dividing them into 3 and liquidating Rose’s 3^rd to build toward her required total provides a mountain of work. To be totally fair, EVERY separate acquisition date in each shareholding would need to be logged and CGT worked out. Each small parcel divided up. The Accountant also added that the additional transfer fees from such a strategy would add up. He does have a graduate who can undertake the task, but it is huge.

Dad’s portfolio has served him well through the stocks that have yielded high franked dividends. My suggestion is that we identify a couple of stocks that has shown a low return with little Capital growth and liquidate those. Argo seems to fit the description well on first glance (literally first glance, I started alphabetically didn’t go further).

The repayment of the loan can be done a number of ways. In the same way that Dad helped me out when he paid out my Taxi Plate back in 1991 when interest rates hit 21.75% with the CBA. So Dad funded my ‘Divorce’ from the Commonwealth Bank.

The Accountant suggested that we base it on the standard ‘Bank rate’. Basing that on a 10 yr ‘loan’ the top 10 comparison rates i found on Mozo.com.au ranged between 2.99% - 4.12%. Averaged out that is 3.55%.

Rose, provide us with a total requirement, it was about $865,000 if I recall correctly. 3.55% adds up to be $2,559 per month, interest only. (Your suggestion sometime ago in putting a Border in downstairs would potentially half that cost to you per month if you were seeking to pay that back into Dad's account from the start).

2nd option is to tally up the monthly interest amounts and subtract those along with the principal from Rose's eventual inheritance.

3rd option is for 3-6 month interest free period for Rose to re-establish herself at Riverview then payments to begin. Those postponed interest payments be tacked onto the Principal to be removed from her eventual inheritance.”

31. Rosemarie responded to that email the following day. She explained that the dispute with Malcolm was not yet resolved but that she estimated that she would need a total of $909,000 in order to fund the final settlement plus money for lawyers. Most of that money was required for the purchase of Malcolm's share of the family home. She added this:

"Selling Argo will not be enough. They are currently worth $840K. I really don't have the skills to say what other shares to sell. Moien said he could help by telling us what the yield, franking credits were for each shares but he wouldn't advise."

32. Rosemarie's email of 14 August was lengthy. In her reply, sent the next day, Rita indicated that she was somewhat cool on aspects of what Rosemarie was proposing, however, so far as concerns the question of the sale of shares to finance any financial assistance for Rosemarie she said this:

"As far as choosing shares to sell to finance your loan, I am not around this, however, if you want to just choose a parcel/s that will cover with the least stress involved, happy for that to happen."

33. John, in turn, responded by explaining, perhaps better than Rosemarie had done, some aspect of what Rosemarie had been proposing. He then said the following:

"Rita, we will go ahead and sell all of Dad's Argo shares and ask Moin to identify a second holding to cover Rose's 909k plus the 15k ‘Gift’ that Dad put down for her legals.

(Rose ARGO closed at $8.33 yesterday. Very near its 2015 high of $8.40. It will slow as it reaches that resistance point, put in a SELL order at $8.36 for the lot to expire in 2 days.)

Then we put on paper the framework of the eventual balancing of that outstanding amount. Rose, will you:

1. want to pay back interest only?

2. Or hold back a few months and get re-established?

3. or deduct all interest accrued plus capital from your portion of the estate when the time comes?"

34. Rosemarie responded to Rita and John that same evening, being 15 August 2019. Relevantly she said:

"I am not sure when Malcolm will agree. It could be next week, month or in 2 months. If you still want me to sell the Argo shares and convert into cash knowing there is no endpoint as yet, let me know.

I am very apprehensive doing this. I feel dreadful using ANY of dads money.

Just let me know what you two decide. Talk between yourselves. Please."

35. Rosemarie followed up with an email later that same evening, after looking at her father's share portfolio. The particular issue at this point was how to make up the difference in required funds, given that the sale of the Argo shares would be inefficient to meet all of Rosemarie's needs.

36. John responded the next morning, as follows:

"Yes Origin Energy is the lowest of all dividends. I'd say make up the difference with those.

We sort of missed an opportunity with Argo with the turn of the market yesterday. I would suggest just sell at market price now."

37. Rita responded ten minutes later, as follows:

"If Rose is saying she doesn't know an end date, do you think we should wait, the market always comes back, and you’re looking at a big parcel of shares here? From the sell order, and I'm no expert, should it be less than a week or so?"

38. John responded at lunch time on 16 August, as follows:

"Rita, that is an Equally fair assessment of what possibly may occur within a 2-4wk period. Argo is just off its 12 month high, it will meet resistance as it approaches $8.31.

I do feel that we’re in for the usual Oct-Nov correction in the Stock market, fed by all this trade war/Brexit rubbish.

But that has to be balanced with the concern of Dad's longevity. If Malcolm signs, Rose will want funds ASAP. If Dad's not around nothing can be done till settlement. Parking funds in our Joint accounts covers that and the other costs we will need to cover.

Rita, if you think Dad is over the worst of his health, and will kick on, then we can wait longer and roll the dice. What's your call?"

39. It seems that John and Rita then spoke because the following morning John sent a further lengthy email to Rosemarie and Rita setting out his recollection of the call with Rita the previous evening. In relation to the sale of shares to fund Rosemarie's divorce settlement he said the following:

"Share Sale to Fund Divorce Settlement

In regards to the required money for the divorce settlement that's all OK. Rita agrees that is what Dad wants to do and what we should all do. If Mum was around I'm sure she'd try to scratch Malcolm's eyes out! Rose, we ALL want to help you. Its just a matter of setting up the framework clearly. Don't think for a moment that the funds won't be there." (emphasis in original)

40. Then under the heading, "Share Sale" he said as follows:

"Advise Moin the Accountant that we will sell ARGO and ORIGIN. Argo has dropped 10c to $8.23 (as I said) but will come back. Rose, place a ‘Sell Order’ in on Dad's CommSec Account. Set the price for $8.28 to expire in 2 weeks. If they fail to sell then sell at market. With the proviso to sell immediately if Dad's condition deteriorates. Put funds in Dad's Pensioner Account, where it earns a little bit of interest – again if Dad's condition deteriorates, bounce straight into my Joint Account and send Rita the copy

Same deal with Origin, sell an amount to make up the difference that you will need for settlement + $30,000 to cover extras. Origin is at $7.02 set a ‘Sell Order’ at $7.10 to expire in 2 weeks and then sell at market if no luck.

Send Moin the sale price and date so he can work out the Capital Gains Tax. Dump all the funds in Dad's pensioner account."

41. In that same email, on the question of how Rosemarie might repay funds advanced to her he said the following, under the heading "Repayment of Loan":

"Rose there should be an amount that you can comfortably payback into Dad's Pensioner Account. In the same way I paid Dad back between 1991-1995 the Taxi Plate loan. Because of your larger amount we don't expect you to pay the principal. Paying the interest only will also make for a ‘neat’ calculation come the time we need to deduct the principal amount from your portion of the estate.

A current Interest only rate of 3.45% on $909,000 comes to a $1206 payment per fortnight. This Principal amount may change depending on the settlement circumstances.

We are all there to help you, Rose. Rita and I will support Dad's wishes 100%."

42. The following day John sent a further email. Although I have not referred to all of the detail of their correspondence about this time, it is relevant to note that each of John, Rita and Rosemarie, were concerned that if Frank should die before Rosemarie's affairs were settled then complications could arise. In his 18 August email John said:

"Set up those ‘Sell orders’ as outlined below. I don't have Dad's CommSec login to do so. Once Sale(s) go through send copies to Moin. Transfer from CDIA to Dads Pensioner Acc. Then immediately to my joint account if Dad deteriorates."

43. The following day was Monday, 19 August 2019. On that day, Rosemarie acted exactly in accordance with what John had outlined in detail in his correspondence, to which I have already referred. She placed orders to sell the Argo and Origin shares.

44. As this rather lengthy summary of the correspondence between the parties in mid-August 2019 demonstrates, all three of Rita, John and Rosemarie were actively involved in the decision to sell the Argo and Origin shares and to place the proceeds into an account so that they could be lent to Rosemarie to fund her divorce settlement.

45. In his 31 January 2024 affidavit John said the following about the circumstances that I have just been describing:

”37. On both 17 and 18 August 2019 I provided Rose with my thoughts on the most suitable shares to be sold when it was time to do so. I did not explicitly give instruction or consent to proceed with the sale of shares at that time.

38. On 19 August Rose proceeded with the sale of Dad’s Argo shares and Origin Energy shares for a total sum of $952,356.09.

39. It was a surprise to me that Rose had sold those shares as I didn’t believe her property settlement was due. But having done so there was little we could do to reverse the sale. A week later when the shares had dropped in value, I did mention that it was fortuitous that Rose had sold the shares then.”

46. I emphasise, in referring to that evidence, that John says that he did not explicitly give instruction or consent to proceed with the sale of shares at that time and that he said that it was a surprise to him that Rosemarie had sold those shares as he did not believe her property settlement was due.

47. In the witness box, John was pressed on what he had meant by these paragraphs in his affidavit. In my view, he was unable to give a coherent explanation as to why it was that he said that he had not consented to, or given any instruction in relation to, the sale of the shares. It seems patently obvious, from the correspondence to which I have referred, that he not only consented to the sale of the Argo and Origin shares but that he was instrumental in the decision to sell them on the day and at the price that they were actually sold.

48. In fact, he gave explicit instructions to proceed with the sale. I just cannot accept that he was surprised that Rosemarie sold the shares, given the circumstances in which she came to sell them.

49. In those circumstances, I am not prepared to place any weight whatsoever on John’s evidence in paragraphs 37 to 39 of his January 2024 affidavit. I do not think I am able to proceed on any basis other than that this evidence is altogether unreliable.

Post-share-sale events

50. Rosemarie and Malcolm finally reached a settlement of the dispute in December 2019. Final consent orders were made by the Family Court on 19 December. As had been foreshadowed in the numerous discussions and in the correspondence to which I have referred, in order to fund their obligations under that settlement Rosemarie drew the sum of $815,336.80 from Frank’s account, that being the account into which the proceeds of the sale of the shares had been deposited, on 4 February 2020.

51. At the time that that occurred, and even now, Rita, John and Rosemarie all considered this advance to be a loan and that Rosemarie had an obligation to repay it with interest out of her share of her father’s estate. However, the siblings had not at this point quite decided on the terms of the loan on the day on which that sum was advanced.

52. In March 2020, Rita prepared an Excel spreadsheet with a “repayment guide” based on a 30 year loan of $815,336.80 with interest only weekly repayments calculated at 2.99% per annum. She sent this repayment guide to John and Rosemarie under cover of an email dated 13 March 2020. She sent a revised version of the spreadsheet on 16 March. John responded to Rita’s email that same day saying that he had not “had a deep look at the spreadsheet yet” but he did point out that some of the funds that had been advanced to Rosemarie were a gift.

53. Two days later, on 18 March, John wrote a further email, having had an opportunity to review the spreadsheet in more detail.

54. It is important, in my view, to see what he wrote, which included the following:

“… Just so I’m understanding this correctly.

1) Can we confirm that you are only going to pay back the INTEREST on the 817K?

2) That is what the weekly $470 amount represents.

3) The principal 817k will be taken off your inheritance entitlement when the time comes.

4) You have a $15,000 gifted amount for the legals that I know Dad agreed to

5) You would like monetary consideration of $25,000 p/a for 5 yrs of providing Primary care to Dad = $125k

6) You still have totals for the House reno and Barts expenses to come through”.

55. Rita responded to that email on 23 March. As to those first three points dealing with Rosemarie’s loan in John’s 18 March email, she made additions to the document that represented her position on the terms of the loan, adjacent to each of John’s points as follows:

“1) Can we confirm that you are only going to pay back the INTEREST on the 817K? Rose is welcome to pay off the principal as well, this is a bare bones repayment schedule i.e. longest term, low rate, interest only to soften the repayment burden

2) That is what the weekly $470 amount represents. The $470 is the interest on the principal amount, yes. Bear in mind though that each week a payment / offset is not made the principal amount increases by the interest due, resulting in an increased interest payment due the following week. The principal has increased by $3287.41 since the drawdown

3) The principal 817k will be taken off your inheritance entitlement when the time comes. The principal amount may be higher or lower, depending on what payments / offsets have been made in the meantime. I assume this will be the case.” (emphasis in original)

56. John sent a further confirmatory email on 9 April. I call it a “confirmatory email” because it seems to me that it confirmed his understanding at that time of the terms of the loan. The email in fact dealt with a number of other matters as well, but so far as it concerned the advance of funds to Rosemarie, it described the amount as a “loan debit”. So far as repayment was concerned, he said the following:

“The capital $813,836.80 is deducted from Rose’s inheritance by the way of the 3 way equal distribution of Dad’s final investment assets on his passing. Rose’s portion having the $813,836.80 withheld and equally divided between Rita Angus and myself.”

57. There is a discrepancy in the evidence concerning this matter because one other version of this same email seems to me to include an additional sentence in relation to the portion that I have just described concerning the repayment of capital. That other version of what appears to be this same email adds an additional sentence that reads, “The capital still needs to be determined”.

58. In response to the version of the email that contains this additional sentence, it seems to me that Rita said the following:

“What do you mean the capital still needs to be determined to John? The current amount due is $819,565.90DR and yes, Rose’s inheritance would be less this amount which would be divided between yourself and I.”

59. I do not, however, read either version of John’s email about this matter to suggest that he believed as at 9 or 10 April 2020 that Rosemarie may be required to pay back an amount other than the sum of $813,836.80 plus interest at 2.99% per annum. I say that because there is a further email in response to Rita from John explaining what he had meant and, if I have understood that email correctly, he says:

“Rose may wish to ‘credit’ the principal amount to bring the total owed back to the original loan amount. I’ll leave you both to nail the details and provide the schedule.”

60. By way of further explanation and in response to what Rita had said concerning John’s comment that the capital still needed to be determined, John said that his point was only that, “the Capital/Principal amount is changing due to the weekly interest payments accruing and method of pay back not agreed on and actioned”.

61. The correspondence that I have just described in early April 2020 demonstrates that by 9 or 10 April 2020 Rita, John and Rosemarie were in agreement that the sum of $813,836.80 which had been advanced to Rosemarie in February 2020 was a loan, that Rosemarie was required to pay interest on a weekly basis calculated at 2.99% per annum or else that interest would accrue and be capitalised, and that the loan and any accrued interest would be repayable by her out of her share of Frank’s estate.

Loan agreement

62. Rita then drafted a form of loan agreement for all three of them to sign. This occurred between about 10 April and 14 April. I infer that she did so because she believed that all three of them were by this stage in agreement as to the terms of Rosemarie’s loan. That would have been a very reasonable assumption at the time due to the correspondence that I have just described.

63. However, subsequently, starting on 23 April 2020, John began to correspond about a different matter, namely, the question of how the transactions with Rosemarie affected what he called the “issue of equity” and he said in this regard:

“Is there an outstanding issue of equity where that capital amount value has reduced by CPI each year? The interest paid by Rose does favour Dad’s portfolio which we all equally benefit from so that is equitable.

Should we CPI the capital and distribute that amount Between Rita and I?

Rose has benefited through the personal use of that capital amount which should increase her property value.

Can you see what I’m seeing?”

64. It was this suggestion, that came only after the three had already agreed on the terms of the loan, that was the seed of the dispute among the parties and it remains at the core of the plaintiff’s case.

65. The particular concern seems to have arisen from the circumstance that particular shares which all three of them had decided to sell in order to fund the loan to Rosemarie appeared to be rallying. This seems to have led John to believe that Frank was suffering a loss of income that could have been avoided if - instead lending money to Rosemarie with interest - he instead had, through his attorneys, come to some different arrangement with Rosemarie whereby she would be required to repay the amount of capital that reflected an increase in accordance with the Consumer Price Index.

66. Unsurprisingly, given that this suggestion came only after all three of them had decided to sell the Argo and Origin shares and to lend the money at interest to Rosemarie, it was not embraced either by Rita or Rosemarie. In fact, in July 2020 Rita executed the agreement that she had drafted in April, as did Rosemarie, which made clear that Rosemarie’s obligation was to repay the principal sum with interest at 2.99%.

67. Before doing so, Rita had explained to John in writing that this new suggestion had come only after all three of them had discussed the terms of the loan in detail and, as she understood it, reached an agreement as to that matter.

68. By May or early June, Rosemarie had started to pay interest in cash on the basis of what had been set out in the correspondence among the parties.

69. As to John’s position concerning the so-called equity as between the three parties as beneficiaries of the estate, Rita wrote the following:

“Yep, that looks fine. Email John one more time (or I can if you wish), and ask him again, also mentioning we need to see what our options are if he does not reply and will be seeking advice on this. The definition of jointly and severally means not all of us need to agree / sign documents, I would think in our situation majority rules however. Hopefully it doesn’t come to this though”.

70. This was a reference to her preparedness to sign the written loan that she had drafted based on her understanding of what the parties had agreed in April.

71. The agreement that was executed on 22 July recited that:

“Agreement between Rosemarie Moore, Rita Angus and John Aquilina

Dated 22^nd July 2020

An amount of $813,836.80 has been advanced to Rosemarie Moore on the 4.2.2020 to facilitate the purchase of property at 34b College Road South, Riverview, NSW, consisting of:

$351.18 loan fee discharge

$61,485.62 loan discharge

$752,000.00 property settlement

$813,836.80 drawdown amount

The weekly repayments commencing 11.2.2020 will be interest only, based on a 30 year loan at a rate of 2.99% on $813,836.80, which equal $467.96. This amount is to be paid weekly by direct credit to account 062128 28004145 Frank Aquilina.

On settlement of the Estate of Frank Aquilina (which includes the value of the loan to Rosemarie Moore) Rita Angus and John Aquilina will receive an initial sum of $813,836.80 each. The remaining Estate will then be divided equally in thirds between Rita Angus, John Aquilina and Rosemarie Moore, as per Frank Aquilina’s will.

Regarding the renovation costs of 13 Kitchener Ave, Cabarita prior to leasing and outstanding amount for services to Frank Aquilina.

The amount of $63,203.82 has been paid to Rosemarie Moore via direct credit to nominated account, consisting of $17,883.42 being reimbursement of labour and expenses and $50,000 as reimbursement for services provided to Frank Aquilina in way of care/health/house/financial management from 2012-2019, less $4,679.60 to cover repayments on advanced amount from 11.2.2020 to 14.4.2020.

This reimbursement are to be considered as gifts of money.” (emphasis in original)

72. John refused to sign the document.

Events following Frank’s death

73. Frank died in February 2022. Probate was granted to John, Rita and Rosemarie on 30 May 2022.

74. Rosemarie continued to make her weekly interest repayments, possibly with some intervention but, in any event, up until the time that probate was granted.

75. These proceedings were commenced in August 2023.

76. The parties also reached an agreement during 2023 that allowed the estate to be partially administered notwithstanding the present dispute. The agreement that they reached was titled “Heads of agreement” and was in evidence. It is only relevant to note that that agreement accommodated a truing up of Rosemarie’s interest obligations and the repayment by set-off of all of her obligations under the loan including the repayment of principal and interest.

77. I will now turn to the four issues in dispute that I identified at the outset.

First issue: Frank’s capacity to consent

78. The first question is whether or not Frank had capacity to consent to the transactions which Rita, John and Rosemarie undertook in his name in 2019 and 2020.

79. In my view, he did. Although there is no question that he was suffering from some level of cognitive decline by March 2020 when the critical discussion with Rosemarie was held, I have been asked to reach a conclusion about the question of his cognition only on the basis of lay evidence and, to a very limited extent, on a much later report of a treating psychiatrist who was not asked to prepare a report for these proceedings.

80. There is some evidence from the parties themselves as to their own opinions as to Frank’s state of cognition at the relevant time.

81. To the extent there is conflict in that evidence as to what they say they saw and observed in Frank’s behaviour at the relevant time, I prefer the evidence given by Rosemarie and I say that for several reasons.

82. The first is that she is the one who actually had the critically important discussion with him in March 2019 at which time she said she obtained Frank’s consent to the course of conduct that was then undertaken.

83. The second is that she sent a recording of that discussion to her siblings, and I know that John at least listened to that recording and at the time satisfied himself that his father really did consent to the proposal. It is unlikely that John would have proceeded with the proposal to sell shares and lend money to Rosemarie if he had entertained any doubts as to whether or not it was something that Frank actually wanted.

84. The third reason is that at least so far as John was concerned, his evidence about another centrally relevant and important matter has otherwise been shown to be quite unreliable. So, to the limited extent that there is conflict between his recollection and Rosemarie’s, I prefer Rosemarie’s.

85. Lastly, although I do not really place much weight on this consideration, it is relevant to note that Rosemarie is a palliative care nurse and among the three siblings, it seems to me that she is best placed to form a lay opinion about the capacity of a 91 year old man to agree to transactions of this kind.

86. Although the evidence of Frank’s capacity is limited, the evidence of his lack of capacity is even more limited.

87. The question of capacity was raised by the plaintiffs and so for them to prove on the balance of probabilities.

88. It seems to me that really the most cogent evidence of Frank’s capacity is the March 2019 transcript of the discussion between Rosemarie and Frank. The plaintiffs could have sought some opinion evidence in relation to that transcript and on the basis of Frank’s medical records, which must have been easily obtainable.

89. But in the absence of material of that kind and doing the best I can with the evidence that I have, I am unable to accept the plaintiff’s submission that he lacked capacity to consent to the transactions that are now in dispute. In fact, it appears to my untrained and lay eye, looking at the transcript of the March 2019 discussion, that Frank was reasonably lucid and clear in that discussion. The proposal that Rosemarie was putting to him was a fairly straightforward proposal for him to help her pay out her husband.

90. I am persuaded that Frank was capable of consenting to an arrangement like that at the time. That being so, it is then necessary to determine whether Frank in fact consented to the transactions that took place.

91. As I have already noted, the discussion that occurred between Rosemarie and Frank in March 2019 was reasonably detailed. The transcript, as I have already suggested, satisfies me that Frank knew what Rita was asking of him and that he appreciated the significance of the assistance that she was seeking from him.

92. Although I accept that the finer points of how funds would be provided to Rosemarie were not mentioned, it is quite clear that Frank understood that he was being asked to provide funds for Rosemarie for a specific purpose and that to the extent he was being asked to provide funds, they would be repaid out of his estate after he died. He understood that he was being asked to help Rosemarie financially up to the sum of somewhere between $700,000 and $900,000 for the purpose of funding her divorce settlement and that the point of doing so was to allow her to keep the family home where she had lived with her daughters.

93. In my view, Frank not only understood what he was being asked, he also agreed to it. If he had not understood what he was being asked, he would not have joked that he wished he was not giving her the money because that way she would keep living at the family home in Concord.

Second issue: Defendant’s alleged breach of fiduciary duty

94. It does not automatically follow from those conclusions that there is no need to consider the question of whether or not Rosemarie breached her duty to Frank in carrying out the transactions.

95. Although I have found that Frank was capable of consenting to the proposal, and that he in fact consented to it, he of course did not agree to the finer particulars as to which shares to sell or the precise terms on which the proceeds of sale would be lent.

96. To the extent those things actually occurred, they were done on his behalf by Rita, Rosemarie and John. Whether they did so pursuant to their power of attorney or simply as Frank’s agent, does not really matter. Their obligations in equity were much the same. Either way, they were exercising fiduciary power. Given the way the case was argued, I will assume that the steps that were taken were all done pursuant to the power of attorney.

Applicable legal principles

97. The legal principles that apply when an agent seeks to demonstrate that they acted with the fully informed consent of their principals were helpfully collected and explained by Leeming JA in Katsoulas v Kritikakis; Katsoulas v Apostolatos [2024] NSWSC 67 (‘Katsoulas’). At paragraphs [115] through to [119] of those reasons, Leeming JA drew attention to the several propositions that are directly relevant here.

98. Firstly, his Honour said at [115] by reference to what his Honour had himself previously said in Taheri v Vitek (2014) 87 NSWLR 403; [2014] NSWCA 209 that, “as between principal and agent, the agent is a fiduciary, and speaking generally he is required not to place himself or herself in a position of conflict, nor to obtain a profit or benefit from the position, without first obtaining fully informed consent.” His Honour explained that the notion of fully informed consent is one that applies in various ways in dealings concerning a fiduciary. However, as Leeming JA pointed out, fully informed consent is a defence to be established by the fiduciary.

99. His Honour also pointed out in [116] that the standards imposed upon a fiduciary by equity are exacting. For example, it is not sufficient to demonstrate that the transactions undertaken by the agent were “fair”. The onus is on the agent to demonstrate that the transactions were “open and fair, and free from all objection”. That was a reference to what had been said by the High Court in Maguire v Makaronis [1997] 188 CLR 449; [1997] HCA 23. As Leeming JA noted, the High Court “added that the fiduciary in such circumstances comes under ‘a heavy duty to show the righteousness of the transaction.’”

100. Of particular relevance I note what Leeming JA said at [118] of Katsoulas. There his Honour pointed out that whether or not a fiduciary will in a particular case discharge the burden is fact-dependent. His Honour referred to Atanaskovic Hartnell v Birketu Pty Ltd (2021) 105 NSWLR 542; [2021] NSWCA 201 at [48] to [50] where Gleeson JA said, “The consent must be fully informed and what is required is a question of fact in all the circumstances of each case and there is no precise formula which will determine in all cases if fully informed consent has been given.” It was also pointed out that consent can be established “at different times and in different ways” and the sufficiency of disclosure can depend on the sophistication and intelligence of the persons to whom disclosure must be made: see Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 at [107].

101. As this statement of principle by Leeming JA demonstrates, the precise content of an attorney’s obligations will vary from case to case depending on all of the facts. In this case, by the time any decision was made to sell the Argo and Origin shares, Frank had indicated that he was willing to assist Rosemarie financially. Although expressed in quite general terms, the arrangement he was asked to approve was clearly defined. He was being asked to provide money to Rosemarie to fund her divorce settlement on terms that she repay the amount out of her inheritance. In the context of a family arrangement and where the only realistic source of funding was through the sale of shares owned by Frank, I am satisfied Frank’s consent to the proposal was a sound basis for Rosemarie and her siblings to sell shares sufficient to provide the funds to Rosemarie for the purpose of finalising her divorce settlement. It was also in my view a sound basis on which the three could agree that the funds would then be lent to Rosemarie on terms that they be repaid out of her share of the estate, with interest.

Conclusions as to breach of fiduciary duty

102. So far as concerns Rosemarie’s duty as agent or as the holder of a power of attorney it is true that she stood to profit from these transactions because she was proposing to take the advance of funds in order to fund her divorce settlement but it has not been suggested that she was intending or did in fact profit from the transaction in any other way. Furthermore, to the extent that her interests as a borrower under the proposed arrangement came into conflict with Frank’s interests it seems to me that the conflict was one that Frank agreed to. It follows from this that I consider that to the extent Rosemarie stood to profit from the transactions and to the extent that the transactions placed her in a position of conflict with Frank they were a profit and a conflict to which Frank assented.

103. Given Frank’s willingness to assist Rosemarie, a fact which all three of John, Rita and Rosemarie satisfied themselves of before taking any steps at all, it seems to me that it was open to one or more of them to use their power as attorney to give effect to his willingness to assist Rosemarie. There were any number of ways that that could have been done.

104. They could have undertaken some kind of securities lending arrangement or a short sale agreement so that particular securities that needed to be sold in order to fund the arrangement needed to be returned to the estate in due course. Alternatively, they could have lent funds on terms that interest was required to deliver a return that equalled the average yield on what Frank’s portfolio had been yielding in some defined period prior to the transaction occurring. They could have lent funds on terms that the principal and interest would synthetically replicate the total return that would have been earned on the particular shares that were sold in order to fund the advance. But of course they could also have done exactly what they did, which was to sell shares and lend the funds at a commercial rate of interest. These were all, it seems to me, perfectly reasonable options that were open to the attorneys to give effect to Frank’s obvious willingness to assist Rosemarie. It so happens that they chose the option of selling shares and lending the proceeds at interest.

105. I can accept that, with the benefit of hindsight, Frank and his estate would have been better off in the long run if the siblings had picked different stocks to sell or if they had required Rosemarie to enter into some different arrangement than the one that was in fact entered into. But really, what of it? The course they adopted both in selling the securities in August 2019 and in lending the proceeds with interest in February 2020 was a course of conduct that seems to me to have been comfortably within the range of reasonable options that were open to all three of them at the time.

106. In my view none of Frank’s children did anything wrong in choosing to sell the Argo and the Origin shares, to bank the proceeds and then to lend them at a competitive rate to Rosemarie to be paid out of her share of the estate. In my view Rosemarie did not breach any fiduciary duty that she owed to Frank by selling the Argo and the Origin shares on 19 August 2019. That was a transaction that was well within her power. It was a perfectly reasonable scenario to give effect to Frank’s willingness to provide financial accommodation to her. To the extent she stood to profit from that transaction it was a profit that Frank accepted that she should get. To the extent that the transaction potentially placed her in a position of conflict with Frank, it was a conflict that Frank clearly had no difficulty with. He understood full well that the funds would be repaid, albeit out of Rosemarie’s share of the estate. Nor in my view did Rosemarie breach any fiduciary duty when she took the advance of funds in February 2020. As I have sought to emphasise, she did so on a basis that seems to have been perfectly acceptable to all of the parties, at least at all times up until 23 April 2020.

107. These conclusions are in my view sufficient to deal with the whole of the plaintiffs’ claim but it is appropriate that I indicate my position in relation to the other issues that were argued.

Third issue: Defendant’s estoppel claim

108. As what I have said about the facts shows, the August 2019 sale of the Argo and Origin shares occurred only after there had been very careful consideration by all of the parties, but particularly by John and Rosemarie, as to what shares should be sold, when they should be sold and at what price. I think it is fair to say that Rita was less involved in the making of that decision than the other two but nonetheless it is in my view correct to say that all three agreed that the particular stocks should be sold on 19 August 2019.

109. It also seems to me to be quite clear that all three of the parties took the view that it was appropriate for the proceeds of sale of those shares to sit in a bank account until such time as Rosemarie’s divorce settlement with Malcolm was finalised and then at that point to be advanced to her as a loan. Leaving aside the question of whether John agreed to the written terms of the loan that his siblings agreed to later on in 2020, he unquestionably did agree to the making of the advance to Rosemarie in the first place. If I were to have accepted the plaintiffs’ submission that these transactions involved a misuse by Rosemarie of her power I would have found that she did so with the active and knowing assistance and participation of the plaintiffs.

110. The defendant argued that in these circumstances the plaintiffs could be estopped from asserting any entitlement on behalf of the estate for an accounting from her for the equitable damages that they say flow from the breach. Although it is not necessary for me to decide this point, I would not have found that the estate was estopped from asserting a claim. That is because their claims are brought on behalf of the estate, which I do not think can have been bound by things said and done by the plaintiffs in their own capacity prior to Frank’s death.

111. On the other hand a serious question would arise as to whether the court would grant any relief at all in these circumstances, that is to say in circumstances where as a practical matter the only persons standing to benefit from these proceedings are Rita and John in their personal capacities who, as fiduciaries, were equally complicit in the breaches about which they are complaining.

112. The High Court in Warman International Ltd v Dwyer (1995) 182 CLR 544; [1995] HCA 18 at 559 said that the “cardinal principle of equity” is that the remedy must be fashioned to fit the nature of the case and the particular facts. In my view the particular facts here are such that if there was some breach of duty involved in selling the Argo and Origin shares on 19 August and then lending the proceeds to Rosemarie at interest in February 2020 then they were breaches in which all three of Rosemarie, John and Rita were equally instrumental and for which they would all be liable to account. Given that the only persons who could possibly benefit from these proceedings are John and Rita, who are two of the three defaulting fiduciaries, I would probably have declined to make any award even if I were otherwise satisfied that Rosemarie had breached her duty.

Fourth issue: Quantum of loss claimed by plaintiffs

113. Finally, I should say something about the loss that has been claimed. Again, this is an issue that I do not need to decide but I should indicate the main conclusions that I have reached in relation to it.

114. The plaintiffs’ case is that Rosemarie should now account to the estate for the total sum of about $450,000 which represents the combined value of the so-called “missed dividends” of the Argo and Origin shares and the increase in capital value of an equivalent number of shares between August 2019 and today. It also includes a sum of about $52,000 for capital gains tax and a small amount for brokerage.

113. If it had been necessary for me to decide an appropriate amount of equitable compensation, I would have found that any loss suffered by the estate by reason of the transactions that have occurred was very considerably less than what was being claimed. Even though I accept that the task of assessing loss here is to be undertaken with the full benefit of hindsight (as to which see O’Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262; [1998] NSWSC 596 at 273) I would not have accepted that the estate suffered all of the losses claimed.

114. So far as concerns the tax paid, there may have been some timing disadvantage to the estate in having paid the tax earlier. But as the defendant has pointed out, the CGT on disposal is inherent in the shares themselves. It had to be paid at some point.

115. More importantly, I would not consider it appropriate to award compensation for the loss of dividends on the Argo and Origin shares without setting off the gain that was made to the estate from the payment of interest on the loan to Rosemarie. In fact, on my calculations, the total amount of dividends that were missed over the period between August 2019 and late 2023 when the loan was finally repaid by being set-off against Rosemarie’s share of the estate represented a yield on those shares of approximately 3% per annum. When this is compared to the interest on the loan, which was 2.99% per annum, the estate can be seen to be essentially no worse off.

116. I also do not see why any loss that was suffered by Frank and the estate was not stemmed when the principal and interest was repaid in November 2023. From that time onwards there was nothing stopping either the estate or the plaintiffs themselves from earning the returns on Argo and Origin shares which they say the estate was deprived of and which, they say, the estate continues to be deprived of. If the estate had not been distributed in the way that it was, the funds repaid by set-off could just as easily have been invested in equivalent shares. In the events that have happened each of the plaintiffs has obtained their share of the repaid amount. However, I have no idea what they have done with those proceeds since they were distributed to them. For all I know they could have applied their share of the proceeds on repayment of Rosemarie’s loan towards stocks that have outperformed Argo and Origin in the meantime. The evidence just does not allow me to reach any conclusion at all as to what has happened to any of the parties or in relation to the financial position of any of the parties since the funds were repaid.

117. In all of these circumstances I would have probably have reached the following conclusions. I would likely have found that the evidence did not allow me to reach a conclusion as to whether and, if so, the extent to which the payment of tax actually involved a loss to the estate. I would certainly have found any loss of dividend income was required to be offset by the amount of any interest earned on the loan. So far as concerns the claim to the loss of capital growth on the shares I would have found that, on the evidence, I could not be satisfied that any such loss was suffered after the time that the loan was repaid by way of set-off in 2023. In relation to the period prior to that time it would have been necessary to ask for further submissions and probably further evidence to allow me to reach a conclusion as to whether or not there was a benefit to the estate of moving some of these investments from shares into a loan and whether, even with the benefit of hindsight, this was a benefit to be taken into account in determining the actual loss the estate had suffered. In any event, as I have indicated I do not need to decide those questions.

118. In all of the circumstances and having found that the defendant did not breach any duty and that she did not misuse any fiduciary power, the proceedings should be dismissed. That will be reflected in my orders.

Costs

121. [There was a discussion about costs. The defendant tendered three settlement offers including an offer made on 23 April 2024. That offer was made under r 20.26 of the Uniform Civil Procedure Rules 2005 (NSW) (‘UCPR’) and in the alternative was an offer made on a “without prejudice save as to costs” basis in accordance with Calderbank v Calderbank [1976] Fam 93. It was open for acceptance until 23 May 2024. My reasons on costs were as follows.]

122. The defendant clearly did better than the 23 April offer. Furthermore, although the plaintiffs sought to rely on UCPR r 42.25(1), this is exactly the kind of case that is within the scope of UCPR r 42.25(2)(b). The proceedings were brought by Rita and John as executors for the estate of the deceased (cf as trustee in the name of a trust), but it was in substance for the benefit of Rita and John in their personal capacities.

123. In these circumstances, it is appropriate that the plaintiffs are ordered to pay the defendant’s costs of the proceedings on the ordinary basis until 23 April 2024 and thereafter on the indemnity basis. I will also dismiss the cross-claim.

ORDERS

124. The orders of the Court will therefore be:

1. Dismiss the statement of claim.

2. Dismiss the cross-claim.

3. Plaintiffs are ordered to pay the defendant’s costs of the proceedings on the ordinary basis up to and including 23 April 2024 and thereafter on the indemnity basis.

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Decision last updated: 08 July 2025